RBA minutes spike the Aussie, while dollar weakens on continued healthcare delays

Asia Mid-Session Market Update: PBOC affirms monetary policy to be prudent and neutral; RBA minutes spike the Aussie, while dollar weakens on continued healthcare delays

Asia Summary

- Markets were broadly weaker today, US Republican Senators Moran and Lee say to vote NO on Senate Healthcare bill, this latest opposition to the measure signals that the Republicans might not be able to pass the revised healthcare bill. The White House called for Congress to continue to work on health bill, as inaction is not an option. EUR/USD rose to 1.1537, attributed to how lack of a health care deal could delay Congress’ next action on the debt ceiling.

- RBA meeting minutes showed that the board spent some time discussion the neutral interest rate, noting that it equated to a neutral nominal cash rate of around 3.5%. It also argued that estimates of the neutral real rate suggested that monetary policy had been clearly expansionary for the preceding five years or so. Also noted that recent Govt budgets suggest fiscal policy will be more expansionary in 2017/18 than had previously been expected. Infrastructure investment was expected to have significant positive spillovers to other parts of the economy. Also see some probability of an increase in the cash rate by mid-2018. AUD/USD rose to 0.7887 on the more hawkish view.

- Rio Tinto reported its Q2 production data, coming in slightly lower y/y and lower than expected, also cut FY17global iron ore shipments by ~20Mt to 330Mt. Coal guidance also was cut after Cyclone Debbie closed down production for many of the miners. In China property prices rose in June for all 70 cities y/y. New home prices fell in Beijing, Shanghai and Shenzhen m/m but all rose y/y.

 

Key economic data

- (NZ) NEW ZEALAND Q2 CPI Q/Q: 0.0% V 0.2%E; Y/Y: 1.7% V 1.9%E

- (CN) CHINA JUN PROPERTY PRICES M/M: RISE IN 60 OUT OF 70 CITIES VS 56 PRIOR; Y/Y: RISE IN 70 OUT OF 70 CITIES V 69 PRIOR

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 112.5 v 113.0 prior

- (AU) AUSTRALIA JUN NEW MOTOR VEHICLE SALES M/M: 1.2% V 2.9% PRIOR; Y/Y: 3.6% V 4.9% PRIOR

- (NZ) New Zealand RBNZ Q2 Sectoral Factor Model Inflation Index y/y: 1.4% v 1.5% prior (1st slowdown since Q3 2015)

- (NZ) New Zealand Q1 CoreLogic House Price Index y/y: 10.2% v 13.9% prior

 

Speakers and Press

China

- (CN) China's State Planner (NDRC) to allow 200M tons of new coal capacity to be launched in 2017, to keep coal prices in a reasonable range

- (CN) China’s National Development and Reform Commission (NDRC) Yan: Companies should be prudent in their outbound investment decisions

- (CN) China PBOC affirms monetary policy to be prudent and neutral; to strengthen macro-prudential management and counter cycle adjustments

Australia/New Zealand

- (AU) Australia ACCC releases report on private health insurer; Continues to focus on consumer issues in private health insurance as one of its priority areas in the 2017 Compliance and Enforcement policy

Korea

- (KR) According to Barclay's South Korea's hourly minimum wage hike may push up inflation expectations, which could potentially bring forward any decision by the Bank of Korea to raise the policy interest rate

Japan

- (JP) Bank of Japan (BOJ) bond buying said to raise concerns among some officials

- (JP) Japan Fin Min Aso: No change to FY20 primary balance surplus goal

 

Asian Equity Indices/Futures (00:30ET)

- Nikkei -0.5%, Hang Seng -0.1%, Shanghai Composite -0.6%, ASX200 -1.2%, Kospi -0.1%

- Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax -0.2%, FTSE100 -0.3%

 

FX ranges/Commodities/Fixed Income (00:30ET)

- EUR 1.1538-1.1472; JPY 112.66-111.99; AUD 0.7904-0.7787; NZD 0.7347-0.7263

- Aug Gold +0.3% at 1,236/oz; Aug Crude Oil +0.2% at $46.09/brl; Sept Copper +0.04% at $2.73/lb

- (AU) Australia sells A$150M in indexed bonds, avg yield 1.1158%, bid to cover 3.57x

- (CN) China PBoC OMO: injects CNY200B in 7 and 14 day reverse repos v CNY170B prior

- USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.7611 V 6.7562 PRIOR

- (NZ) New Zealand sells NZ$100M in 3-month bills; avg yield 1.785%

 

Equities notable movers

Australia

- Village Roadshow, VRL.AU Guides FY17 Adj Net profit A$20-23M v A$24Me; Expects to record Wet'n'Wild impairment A$65M pre-tax; Narrows lower FY17 theme park adj EBITDA A$55M (prior A$55-65M); -0.5%

-Rio Tinto, RIO.AU Reports Q2 global iron ore production 79.8Mt v 85.30Mt y/y; Shipments 77.7Mt v 81.8Mte; -1.5%

Hong Kong/China

-Sunac China Holdings, 1918.HK Domestic banks are said to be reviewing its credit risk following a deal to buy assets from Dalian Wanda Group; -10.4%

South Korea

-Hanssem, 009240.KR Reports Q2 (KRW) Op 33.7B v 30.6B y/y; Rev 481.8B v 434.9B y/y; -7.1%

Japan

-Toshiba Corp, 6502.JPJudge delays ruling on Western Digital’s attempt to block chip unit sale, new target of closing sale of chip unit by end of March; +8.3%

 

US markets on close: Dow -0.04%, S&P500 0.0%, Nasdaq +0.03%, Russell +0.2%

- Best Sector in S&P500: Utilities

- Worst Sector in S&P500: Healthcare

- Biggest gainers: FCX +3.2%; M 3.1%; KSS +2.7%

- Biggest losers: CCI -4.2%; BLK -3.1%; SIG -2.2%

- At the close: VIX 9.82 (+0.31pts); Treasuries: 2-yr 1.36% (+0.3%), 10-yr 2.31% (-0.2%), 30-yr 2.90% (-0.3%)

 

US Market Summary

- Stocks closed mostly flat on the day while investors appeared to be on the sidelines as the market awaits the starting pistol of earnings season. Volume was on the low side, 23% and 19% below the 3-month average for the NYSE and Nasdaq respectively. Best performing sectors in the S&P were utilities, gaining 0.4%, with Real Estate and Consumer Discretionary both rising 0.2%.

- (US) Treasury markets were choppy today, finally giving way to a rally in prices as yields fell. 10-year yield dropped 2 bps on the day to 2.31%, and 30-year yield lost as much as 4 bps at one point before closing higher at 2.90%. 10s30s spread widens to 59 bps.

 

US Afterhours Movers

- NFLX Reports Q2 $0.15 v $0.16e, Rev $2.78B v $2.76Be; Guides Q3 $0.32 v $0.22e, total Rev $3.0B v $2.88B, total streaming Rev $2.9B, domestic streaming Rev $1.6B, international streaming Rev $1.3B; net operating margin 6.9%; Guides Q3 total streaming net adds 4.4M, domestic streaming net adds 0.8M, international streaming net adds 3.7M; +10.7% afterhours

-PBYI FDA grants approval for Nerlynx for the extended adjuvant treatment of early-stage, HER2-positive breast cancer; +7.4%

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